Loan refers to the practice of borrowing money from an individual or a bank or financial institution or government. In order to attain a loan, a person has to pass the basic eligibility criteria. However, it is not necessary that the loans are always collateralized. These are usually Personal Loans that do not require any pledge for collateral; only personal loan documents are sufficient in order to avail a personal loan.
Specific documents are taken in order to verify the details of a candidate related to his or her age, address, income and employer. Moreover, the lender also checks the CIBIL score of the borrower in order to ensure that the latter is a sensible and responsible person and the lender will not face any risk in future.
EMI: Equal Monthly Installment
Once the loan has been procured, the entire payment is then divided and a fixed monthly payment has to be made on a fixed date every month. If a person is unable to make the due payments, the resulting matter will become a civil dispute.
This means that even though the person will not be arrested, the matter can go to the court wherein due weightage will be given to the reason behind non-payment.
Following are the benefits of paying your personal loan payment on time:
- Avoiding the dangers of late fees charges –
Since personal loans are unsecured loans, many lenders charge a higher interest rate. The borrower should use EMI calculator to make sure the amount that he or she has to pay in the coming months. Moreover, the lender can apply late fees charges that must have been mentioned in the contract because it is not a collateralized loan.
So if you do not pay your loans on time, it can lead to late fees and it will increase the financial burden on you. Therefore, it is always advisable to pay your loans on time.
- Avoiding any hassle with the lender –
Many lenders tend to be aggressive in their approach of reminding the borrower about the due repayments that he or she may have missed.
Therefore it is important that the borrower should make timely payments in order to maintain peace of mind. In many cases, there have been instances where lenders use muscle power to extract the due amount from the loan taker. To avoid such problems, pay your loan on time.
- Maintaining a positive CIBIL score –
It is a necessity to keep a positive CIBIL score in order to avail loans in future. Unless an unavoidable situation arises, it is advised to pay on time because although CIBIL scores can be corrected, the process will take a lot of time and effort.
If you miss a loan payment date, then it will lower your CIBIL score. Once your CIBIL scores become low, it is difficult to recover it. Therefore, always pay your loans on time to avoid any problems in the future.
Once the candidate has obtained a loan after submitting authentic personal loan documents, it is advised that the person should plan and organize his or her future systematically. This is required in order to maintain his or her peace of mind and utilize the funds effectively.